SG Market (22 Jul 14)

US Market: US shares pared early losses as geopolitical tensions in Ukraine and Gaza worries weighed on sentiment before major earnings reports. The DJIA dropped 48 pts to 17,052 (-0.3%), while the S&P 500 declined 5 pts to 1,974 (-0.2%) and the Nasdaq Composite lost 7 pts to 4,425 (-0.2%). Investors remained jittery amid escalating conflict and mounting death toll in Gaza, and threat of tougher sanctions against Russia in the wake of the downing of the Malaysia Airlines passenger jet. With no economic data out on Mon, corporate earnings were in focus. Toymaker Hasbro fell 2.7% after its 2Q sales missed of estimates. After the bell, Netflix (+0.7%) and Chipotle Mexican Grill (+9.3%) rose as their 2Q results beat expectations. In other corporate news, Herbalife tumbled 11% after hedge fund manager Bill Ackman accused the nutritional product seller of engaging in a fraudulent pyramid scheme. Fast food chains McDonald’s (-1.5%) and Yum Brands (-4.3%) came under pressure following a new food safety scare in China over expired meat supplies. Taking cue from Wall Street, the STI is expected to open a tad lower as short-term stochastic indicators extend into overbought territory. Downside support lies at the 3,280 level with topside resistance at 3,360. Stocks to watch: *M1: 2Q14 results in-line. Net profit increased 12.1% y/y to $43.9m, buoyed by a 13.4% reduction in cost of sales. However, operating revenue dipped 2% to $239.7m, as mobile telco revenue (+3.4% to $167.9m) was offset by a lower international call services (-19.9%) and handset sales (-17.5%). Interim DPS of 7¢ proposed. *Mapletree Logistics Trust (MLT): 1QFY15 distributable income and DPU rose 6% y/y to $46.6m and 1.9¢, respectively. Gross revenue grew 7% to $81m and NPI gained 6% to $69m, due to higher contribution from Mapletree Benoi Logistics Hub, positive reversions from Hong Kong and Singapore assets, contribution from a new Korea property (acquired 2QFY14) and higher revenue from four Japan properties that had solar panels installed last year. Portfolio occupancy however dipped 0.7ppts to 97.6%, with weighted average lease to expiry of 4.7 years. Aggregate leverage increased 0.1ppts to 33.4%, at an overall interest cost of 2.0% and debt term of 3.4 years. NAV per unit at $0.97. *MLT: Acquiring Mapletree Zhengzhou Logistics Park for Rmb205.6m ($41.1m), a 79,000 sqm gfa site located in Zhengzhou, China. Current tenant base at the 99.2% occupied single-storey warehouse includes reputable local and international 3PLs- Deppon Logistics, Menlo Worldwide and Henan Shangchu Logistics, and end-user Dennis Logistics. The DPU-accretive acquisition is expected bring NPI yield of 8% and gearing to 34.5% (+1.1ppts) upon completion. *Frasers Commercial Trust: 3QFY14 DPU was flat y/y at 2.19¢, while 9M14 DPU grew 9% to 6.29¢. 3Q14 gross revenue dipped 1% to $29.6m mainly due to a weaker AUD, though mitigated by higher occupancy and rental rates for the S’pore properties. Nevertheless, lower CPPU distributions arising from conversions helped lift distributable income by 3% to $14.8m. NAV per unit at $1.58. *Keppel REIT: 2Q14 results broadly in-line. DPU fell 3.6% y/y to 1.9¢, although distributable income was roughly flat at $53.2m (+0.7%). Property income grew 15% to $47.3m, and NPI jumped 21.5% to $39.2m, thanks to higher income from OFC, Prudential Tower and 50% interest in 8 Exhibition Street, and lower property expenses. Aggregate leverage stood at 42.8% with all-in interest rate of 2.2%. Portfolio occupancy is 99.4% with WALE of 6.2 years. NAV per unit at $1.40. *Ascott Residence Trust: 2Q14 core DPU rose 5% y/y to 2.19¢, while core distributable income expanded 24.4% to $33.5m. Revenue and gross profit both grew 14% to $88.1m and $46.5m respectively, driven by new acquisitions and higher contribution from existing properties. Aggregate leverage was 36.4%, with effective borrowing rate at 2.9% and weighted average debt to maturity of 3.9 years. NAV per unit at $1.38. *Cache Logistics Trust: 2Q14 results in-line. DPU and distributable income were flat y/y at 2.147¢ and $16.7m, respectively. Gross revenue grew 1.7% to $20.8m driven by rental escalations, although NPI was flat at $19.6m due to higher property expenses. Occupancy remained high at 99.6% with WALE of 3.8 years. Aggregate leverage at 28.9% with all-in-financing cost of 3.47%. NAV per unit at $0.97. *Keppel Infrastructure Trust: 1H14 DPU stable y/yat 3.13¢. Revenue dipped 1.6% to $33.2m, while net profit fell 3.1% to $6.8m, weighed by higher operational expenses. NAV at $0.96. *Keppel Corp: Its majority owned Ocean Mineral Singapore has received approval from the International Seabed Authority on its application for its first seabed exploration licence, that will allow it to explore for polymetallic nodules at a site within the Clarion-Clipperton Fracture Zone of the Pacific. Polymetallic nodules contain copper, nickel, cobalt and manganese, as well as rare earth minerals. *Keppel Corp: According to Qatari news, a JV shipyard between Nakilat and Keppel Offshore & Marine has secured a contract worth 69m Qatari Riyals to design and construct a floating jetty for Qatar Primary Materials Company. *Land transport operators: The LTA will fine SMRT and SBS Transit a total of $1.6m and $50,000, respectively, for past disruptions on their MRT lines. Both companies have 14 days to appeal. *Biosensors: Significant shareholder CITIC Private Equity informs that it has undertaken certain steps to restructure its shareholdings in Biosensors, and is still considering the options available to it to enhance the value of its investment. Separately, Fidelity has raised its stake from 4.7% to 5.1%, via the open market purchase of 6.2m shares at an average $0.875 each. *mDR: MDR Golden, the business partner of mDR’s subsidiary, MDR Myanmar, has signed a three-year agreement with Ooredoo to distribute SIM cards, top-up cards and such other telco services related products in 22 townships within Myanmar's Mandalay region. This comes as Ooredoo is expected to roll out its mobile communication services by Aug ’14. MDR Myanmar provide consultancy and retail franchisee procurement services to MDR Golden. *800 Super: Awarded a $204.9m contract over a seven-year period by the National Environmental Agency, to provide integrated public cleaning services for the south-west region of S’pore. *Frasers Centrepoint / Keong Hong: Jointly won the HDB tender for a 99-year leasehold land parcel at Sembawang Aveneue with site area of 22,190 sqm, which will be developed into a 728-unit executive condo. Keong Hong will be the main contractor for the project.